Austria’s Kontrollbank to Guarantee Iran Business

EghtesadOnline: The Oesterreichische Kontrollbank AG (OeKB) will issue guarantees for the overwhelming majority share of Iran-Austria trade, the president of Vienna Economic Chamber has said.

News ID: ۷۸۳۴۱۰

28 July 2018

"During our negotiations [with OeKB], they announced that they're ready to guarantee the clearance of 80% of the volume of trade between Iran and Austria. The remaining 20% will be guaranteed through another local financial institution," Walter Ruck also told an Iranian economic delegation in Austria.

"Austrian banks previously had doubts concerning working with Iran because of the sanctions, but now they want to recreate the connection," he was also quoted as saying in an article published by the official news website of Iran Chamber of Commerce, Industries, Mines and Agriculture on Wednesday.

The delegation was led by Pedram Soltani, ICCIMA's vice president who also helms the Iran-Austria Chamber of Commerce, according to Financial Tribune.

The news comes after Austria's Oberbank, which had in September 2017 signed a €1 billion foreign finance deal with Iran, announced in mid-June it will withdraw from Iran because of US sanctions. Some Iranian officials have since suggested that the finance deal should not be completely written off just yet.

Soltani welcomed a proposal by Ruck to establish a system for financial clearance between the two nations because it will allow them to do business without exchanging money. He called this a positive and doable proposition, but more importantly, added that "we, the businesspeople of Iran, are even ready to purchase or establish a financial institution in Austria to facilitate things".

The idea was apparently well-received by the VEC president who said, "Purchasing a financial institution is possible and we're ready to devise a framework for this in collaboration with Iranian parties."

Soltani said the previous trip by Iran's private sector delegation to Switzerland showed that the Swiss government is very worried about future trade prospects with Iran and only a handful of Swiss companies' representatives were there since that concern had been transferred to them as well. But he said Austrians have shown a different aspect, which indicates the bilateral will to improve the situation.

Soltani said Iran's private sector will try to establish a network for the continuous transfer of information with VEC and other Austrian chambers of commerce to find solutions for keeping ties alive. He stressed that there is much room to work, as the two countries are only using up to 20% of existing potentials.

"Current hardships will pass in six months, a year, or by the end of the Trump presidency, so we must devise strategies to realize commercial capacities between the two countries," the ICCIMA deputy chief said.

Ruck seconded this view, saying he also believes that Trump will fail to find enough votes for reelection in 2020.

"I believe business people must have long-term views and begin preparing themselves for the post-Trump era," he said.

As Soltani said, a number of European banks, especially smaller ones that have zero or minimum interaction with the US, are awaiting European Union negotiations to restart and offer services to Iranian peers with European backing.

"I think the EU will ultimately put a number of these banks under its support for trade with Iran and they will become the channels of financial ties between European countries and Iran," he said.

EU lawmakers in early July gave approval for the European Investment Bank to engage in business with Iran. About two weeks later, however, EIB president said the lender will put its global operations at risk by investing in Iran, casting doubt on a major EU plan to save the nuclear deal with Tehran, from which Washington unilaterally withdrew on May 8.

The Wall Street Journal last week reported that the French, British and German governments have told Iran they are exploring activating accounts for the Central Bank of Iran with their central banks to open a financial channel and keep the nuclear deal alive.